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SBC/AT&T and Verizon/MCI mergers end hope for phone competition

Mergers of Telecom Giants Ends Hope of Meaningful Competition in Phone, High-Speed Internet Service
Consumers can expect little-to-no choice for most regional telecom services

Thursday, Oct. 27, 2005
(Washington, D.C.) – Consumer groups said today’s Justice Department approval of two mega-mergers – SBC Communications/AT&T, and Verizon/MCI – signals the end of national competition policy, as the newly formed telecommunications giants will control about 90 percent of residential wireline, 70 percent of long distance, and up to half of the wireless telephone service in their respective regions.
“Rubber-stamping these mergers is an embarrassing milestone in this nation because it puts an end to any real hope of head-to-head telephone competition,” said Gene Kimmelman, Consumers Union’s senior director of public policy.
“A Justice Department that 20 years ago shattered the telephone monopoly known as Ma Bell is now coddling the very phone giants who are again trying to create regional telecommunications monopolies,” Kimmelman added.
Consumers likely will soon feel the impact of the mergers, as the lack of regional competition could lead to increasing or inflated prices for local, long-distance, high-speed Internet and wireless service.
“By allowing the top two telecommunications giants to buy up their competitors, the Justice Department told consumers they deserve little to no choice when it comes to phone, wireless and high-speed Internet providers,” said Mark Cooper, Consumer Federation of America research director.
The groups also said the mergers will stymie the competition of Voice Over Internet Protocol (VOIP), which uses high-speed Internet connections to offer consumers other choices in the local and long-distance market.
“These small companies that are aggressively trying to offer alternative phone service will be big-footed by the new AT&T and Verizon,” Cooper said. “For the two-thirds of American consumers who can’t afford or do not take the bundle of voice, video and data services these companies package together, prices for each of these services are likely to climb.”
For more information on this merger and telecom competition, go to “Broken Promises and Strangled Competition” at http://www.hearusnow.org/fileadmin/sitecontent/BELLmerger_6-16-05.pdf

Susan Herold, CU, 202-462-6262
Mark Cooper, CFA, 301-384-2204